Missouri House panel crafting 2 income tax cut plans

JEFFERSON CITY, Mo. (AP) - Eager to cut income taxes, a Missouri House committee was expected to advance two alternatives Tuesday - one reducing taxes only for businesses and the other reducing them for both individuals and employers.

Either of the bills being considered by the House Ways and Means Committee is projected to reduce Missouri's revenues by hundreds of millions of dollars annually- setting up a potential conflict with Gov. Jay Nixon, who has warned that large tax cuts could jeopardize funding for public schools.

The Democratic governor vetoed an income tax cut bill last year and has reiterated his concerns this year. But the Republican-led Legislature has again made an income tax cut a priority for 2014.

"My preference is to just keep sending him bills," said House Ways and Means Committee Chairman Andrew Koenig, a Republican from suburban St. Louis. "If he wants to keep vetoing them, that's what he can do."

Koenig's preferred bill would cut income tax rates for both individuals and some businesses at an estimated cost of around $700 million when fully implemented.

Starting in 2015, the legislation would gradually reduce Missouri's top individual income tax rate from 6 percent to 5.3 percent and phase in a 50 percent deduction for business income reported on individual tax returns. But those incremental tax cuts would take effect only if Missouri's annual tax revenues continue to grow by $100 million over their highest point in the previous three years.

The legislation also would increase the current tax deduction for lower-income individuals, without regard to whether state tax revenues keep growing.

A bill endorsed last week by the Senate Ways and Means Committee included many similar provisions, but would cut the individual income tax rate further, to 5 percent.

Koenig said the House committee also is likely to advance an alternative bill that would cut taxes only for businesses. That proposal includes a similar 50 percent deduction for business income reported on individual returns, as well as a gradual 50 percent reduction in the corporate income tax rate. Those incremental tax cuts would continue so long as state income tax revenues remain above their 2012 level.

The sponsor of that bill, Rep. T. J. Berry, R-Kearney, has said that an income tax cut targeted at businesses could provide a greater boost to the economy, because it would give employers more money to hire people or expand their operations.

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Tax cut bills are HB1253 and HB1295.

Online:

Legislature: http://www.moga.mo.gov

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Missouri House panel crafting 2 income tax cut plans

JEFFERSON CITY, Mo. (AP) ? Eager to cut income taxes, a Missouri House committee was expected to advance two alternatives Tuesday ? one reducing taxes only for businesses and the other reducing them